Example Gains and Losses from the Revaluation of a Foreign-Denominated Account
You can track gains and losses that result from the revaluation of foreign-denominated accounts.
In this example, your company in the United States maintains a bank account in a European bank. In Vision, you set up a foreign-denominated cash account for that bank account and select euros as the currency for that general ledger account.
When You Set Up the Account
When you set up the foreign-denominated account in the Chart of Accounts Info Center, you do the following:
- Select EUR in Currency Code to indicate that the account balance is maintained in euros.
- Do not select Update Cash Basis during Revaluation. Vision will not update cash-basis balances when you revalue the account.
- Do not enter accounts in Revaluation Gain Account and Revaluation Loss Account. Vision will post gains and losses entries to the default unrealized gains and losses accounts specified in the Accounting Company Settings form.
When You Run the Gains/Losses and Revaluations Process
When you run the Gains/Losses and Revaluations process at the end of the accounting period, Vision determines that, with the exchange rate as of the period ending date, the account balance expressed in the functional currency is $100 more than the previous balance. This is the result in the general ledger:
| Account | Debit | Credit |
|---|---|---|
| Foreign-Denominated Cash Account | 100 | |
| Unrealized Gain | 100 |